09/06/2025

BIZ & FINANCE MONDAY | JUNE 9, 2025

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MARKETS/FROM THE BROKERS

SUNBIZ presents extracts of a selection of commentaries and research reports received from stockbrokers on counters that could be of interest to investors.

DISCLAIMER: The information is extracted from stockbrokers’ commentaries and research reports and do not represent the views or opinions of Sun Media Corporation Sdn Bhd. It is not a solicitation, recommendation or an offer to buy or sell the equities featured. Sun Media Corporation shall not be liable or responsible for any consequences resulting from usage of the information.

[ Compiled by SunBiz Team

Slight downside pressure on CPO futures expected this week KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade with a slight downside bias this week, amid rising output and stock levels, said a trader. Palm oil trader David Ng noted that the market is currently entering a seasonally higher production period, which typically begins in April and extends through September or October – a period during which output typically increases, leading to a corresponding rise in stock levels. “We expect the commodity to trade between RM3,720 per tonne and RM3,950 per tonne,” he told Bernama. Interband Group of Companies senior palm oil trader Jim Teh expects the market to experience profit-taking, with prices likely to trade between RM3,700 per tonne and RM3,800 per tonne. “Stock-wise, the market will be closely watching the Malaysian Palm Oil Board data, which is scheduled for release on June 10.” In terms of demand, Teh noted that physical buying is expected from China, India, Pakistan, the Middle East, the European Union countries, and little buying from the United States. “Production-wise, the good weather conditions suggest that CPO output is likely to increase,” he added. On a Friday-to-Friday basis, the spot-month June 2025 contract rose RM23 to RM3,911 per tonne, while July 2025 and August 2025 added RM39 each to RM3,930 per tonne and RM3,917 per tonne, respectively. September 2025 rose RM36 to RM3,906 per tonne, October 2025 increased RM29 to RM3,899 per tonne, and November 2025 went up RM25 to RM3,899 per tonne. The weekly trading volume advanced to 290,679 lots from 281,987 lots the previous week, while open interest edged down to 241,688 contracts from 241,994 contracts.

Ringgit likely to trade at RM4.22-4.23 against greenback THE ringgit is likely to trade around RM4.22 to RM4.23 this week, said Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid. He said multiple US economic data will be out this week, namely US Consumer Price Index and Producer Price Index for May, which play a key role in shaping the market. “While the data might show deceleration in inflation rate, the US Federal Reserve is likely to stay cautious as it is wary about the potential inflationary pressures arising from the tariff shocks. “Already, responses from the US Institute for Supply Management Index survey indicated that businesses have become more pessimistic as the higher tariffs have affected the supply chains and resulted in higher operating costs,” he told Bernama. The ringgit ended last week higher against the US dollar, closing at 4.2270/2360 on Friday from 4.2530/2605 a week earlier. It traded mostly higher against a basket of major currencies. The ringgit rose vis-à-vis the Japanese yen to 2.9324/9390 from 2.9531/9585 and inched higher against the British pound to 5.7212/7334 from 5.7284/7385 a week earlier. However, it depreciated versus the euro to 4.8268/8371 at Friday’s close from 4.8169/8254 at the end of last week. The ringgit traded mostly higher against Asean currencies. The local note improved against the Singapore dollar to 3.2862/2934 on Friday from 3.2938/3002 the previous week, edged higher versus the Indonesian rupiah to 259.5/260.2 from 260.4/261.1 and stronger vis-a-vis the Philippine peso to 7.58/7.60 from 7.62/7.64 a week before, However, it weakened versus the Thai baht to 12.9599/9947 from 12.9507/9790 in the previous week.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.2940 2.8110 3.3350 3.1370 4.9210 2.6050 3.3350 5.8360 5.2690 3.5840 60.2000 67.6200 55.2700 5.0800 0.0273 2.9910 43.7500 1.5500 7.8300 119.0600 115.6700 25.1200 1.4700 46.2500 13.7500 118.2100 N/A

4.1600 2.6970 3.2380 3.0530 4.7620 2.5090 3.2380 5.6510 5.0460 3.3380 57.6500 62.2200 52.5200 4.7700 0.0247 2.8950 40.2300 1.4500 7.3600 113.0300 109.8100 22.6800 1.3500 42.1100 12.1900 112.0700 N/A

4.1500 2.6810 3.2300 3.0410 4.7420 2.4930 3.2300 5.6310 5.0310

1 Australian Dollar 1 Brunei Dollar 1 Canadian Dollar 1 New Zealand Dollar 1 Singapore Dollar 1 Sterling Pound 1 Swiss Franc 100 UAE Dirham 100 Bangladesh Taka 100 Chinese Renminbi 100 Danish Krone 100 Hongkong Dollar 100 Indian Rupee 100 Indonesian Rupiah 100 Japanese Yen 100 New Taiwan Dollar 100 Norwegian Krone 100 Pakistan Rupee 100 Philippine Peso 1 Euro

111.8700

3.1380

N/A

62.0200 52.3200 4.5700 0.0197 2.8850 40.0300 1.2500 7.1600 112.8300 109.6100 22.4800 1.1500 41.9100 11.7900 N/A

100 Qatar Riyal 100 Saudi Riyal

100 South Africa Rand 100 Sri Lanka Rupee 100 Swedish Krona

100 Thai Baht

Source: Malayan Banking Bhd/Bernama

Econpile Holdings Bhd Buy. Target price: RM0.42

Duopharma Biotech Bhd Buy. Target price: RM1.56

UMediC Group Bhd Buy. Target price: RM0.45

June 6, 2025: RM0.395

June 6, 2025: RM1.38

June 6, 2025: RM0.30

Source: Bloomberg, RHB Research

Source: Bloomberg, Phillip Capital Research

Source: Bloomberg, RHB Research

DUOPHARMA Biotech’s post results briefing left us feeling upbeat on its prospects. Its growth should still be anchored by: i) The extended contract to supply pharmaceutical products under the approved product purchased list or APPL, as well as ii) favourable raw material costs. DBB is trading at 13.6x 2026E P/E, 1.3SD below its 3-year historical mean. DBB’s existing contract for the supply and distribution of human insulin expired in April. The Ministry of Health (MOH) recently extended its insulin supply contract for another six months (ends on Oct 28), before a new round of contracts to be awarded begins. Management is aware of a new competitor participating in the tender as well. While such developments remain fluid, we expect a potential earnings impact of 5% - based on our FY26F earnings on the basis of a 10% NPM assumption, should the MoH decided to split the contract equally between DBB and its competitor (10% earnings impact if DBB fails to secure the contract). DBB has received the Board’s approval to expand the small volume injectables (SVI) line at the K2 facility, occupying the 20,000 sq ft of space on the fourth floor that was vacated by staff who moved their work areas to the newly completed K3 building. In terms of average plant utilisation rate, DBB recorded an average 70% run rate across its Klang and Bangi facilities, while its highly potent active pharmaceutical ingredient (HAPI) plant in Glenmarie chalked a 24% utilisation rate as at Dec 2024. Nevertheless, management expects the utilisation rate for the Glenmarie plant to improve in 2025, after it secured orders from the public sector. Maintain BUY, new DCF-derived TP of RM1.56 from RM1.50. – RHB Research, June 6

ECONPILE announced its eighth job win for FY25 by securing a sub contract worth RM42.8m from Irama Duta for the bored piling works for the Penang Light Rail Transit (LRT) project from East Jelutong to the Gelugor area. The project is expected to commence works in August, with completion targeted for Oct 2027. The last time ECON secured a contract related to railways was back in Aug 2022, ie piling works for the Immigration, Customs and Quarantine Complex (ICQC) for Rapid Transit System Link (RTS Link). We understand that, prior to this job win, ECON was already involved in some test piling works for Penang LRT Segment 1. Based on our observation, the stretch between the East Jelutong and Gelugor stations is around 5km vs the full estimated 24km length of Segment 1 of the Penang LRT - which could mean there could be five piling packages in total (assuming each package covers 5km). Hence, we do not discount the possibility of more piling awards taking place in the future. We estimate ECON’s latest outstanding orderbook to be RM480m, while YTD FY25 new job wins stand at RM300m (vs our target of RM300m for FY25) - this includes piling works for condominiums, a bridge, and mixed development commercial buildings on top of the latest job win. The group’s tenderbook stands at RM1bn, and contains private and public sector jobs. Potential rerating catalysts include faster-than-expected approval for the Sungai Klang Link project (RM300-500m for piling works). We expect the GPM of this latest job to be 5-8%. We remain positive on ECON’s track record in infrastructure jobs vs other piling contractors, in addition to its undemanding valuation as the stock’s FY26F P/BV of 1.2x is -0.5SD from the 10-year mean. Keep BUY and RM0.42 TP. – RHB Research, June 6

UMEDIC’S 9MFY25 core net profit of RM5.7m (-2% YoY) was below ours but within consensus expectations, accounting for 33% and 76% of full-year forecasts, respectively. The negative deviation was mainly due to weaker-than-expected sales volume in manufacturing and distribution segments. 9MFY25 revenue of RM36.3m (-9% YoY) was dragged by lower revenue contribution from the manufacturing (-19%) and the distribution segment (-3%). Sequentially, 3QFY25 revenue rose 1% QoQ to RM11.6m as weaker marketing and distribution segment offset stronger manufacturing orders. EBITDA margin contracted by 2ppts QoQ to 27.6%, weighed down by higher operating costs. UMediC’s capacity expansion is 85% completed, with full completion targeted by Jul25. New machinery is expected to arrive by Jun25, with commissioning to take about 1 quarter. Monthly production of HydroX prefilled humidifiers is expected to ramp up to its full capacity of 1.1m bottles by 4QCY25. Utilisation currently hovers at 60-70%, with double-digit growth expected post-upgrade. We expect stronger earnings contribution in FY26E supported by management’s active efforts to secure new orders and drive optimal utilisation of the expanded production capacity. We cut our FY25-27E earnings forecast by 23-29% to account for slower-than-expected sales from the manufacturing segment. Our TP is revised down to RM0.45 (from RM0.78), based on a lower target PE of 18x (from 21x; in line with -1SD of its 2-year historical mean) to reflect a more cautious stance amid the prevailing softness in broader market conditions. Downside risks to our call include a potential slowdown in medical equipment demand, operational disruptions, and the loss of licenses. Maintain BUY with RM0.45 TP. – Phillip Capital Research, June 6